German chipmaker Infineon Technologies is buying American counterpart Cypress Semiconductor in a deal that’s reportedly worth $10 billion.
According to Bloomberg, the cash deal, which includes debt, valued Cypress at $23.85 per share, a 46 per cent premium compared to the American company’s average price in the last month.
On the other hand, Infineon’s shares fell seven per cent as a result of the deal.
Bloomberg claims that the semiconductor industry as a whole is slowing down, which is probably one of the reasons why Cypress is trying to re-position itself as a chip provider for the automotive industry.
This is not the first time large corporations in the semiconductor industry close their ranks. NXP Semiconductors recently bought Marvell Technology Group’s Wi-Fi business for $1.76 billion, while Nvidia bought Mellanox for $6.9 billion. Both acquisitions happened in the past couple of months.
Infineon lost roughly a third of its value in the last 12 months, however it expects the deal to fuel growth. “This will accelerate the company’s path of profitable growth of recent years,” Infineon said
Cypress, on the other hand, is trying to re-position itself as a company that would serve the automotive industry, most notably – connected cars. Bloomberg says Cypress told its investors recently that it expects its automotive business to grow anywhere between eight and twelve per cent over the next five years. At the same time, it expects its Internet of Things (IoT) business to grow 14 per cent for the same time period.
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